Shares of Muthoot Finance Limited fell 5.03% to ₹3,353.50 on the NSE on May 15, shedding ₹177.60 from a previous close of ₹3,531.10, even as four major brokerages maintained bullish ratings on the gold financier following what was by most measures an exceptional Q4FY26. The stock touched an intraday low of ₹3,305.10 against a day’s high of ₹3,523.90, with the 52-week range spanning ₹2,027 to ₹4,149.50.
The disconnect between the results and the stock reaction has a straightforward explanation: the quarter was driven by conditions — surging gold prices, elevated loan-to-value ratios, and a 50% AUM surge — that may not fully persist into FY27, and the market is discounting the near-term reversal risk even as brokerages maintain their structural conviction.
What the Q4FY26 numbers showed
Muthoot Finance reported Q4FY26 standalone profit after tax of ₹3,080 crore, up 105% year on year — significantly ahead of market estimates. Standalone AUM grew 50% year on year, supported by elevated gold prices and higher LTV levels. Net interest margins improved to 20.8% on the back of higher loan yields. Return on equity rose to 34%. EPS more than doubled year on year. By any conventional measure, this was a blowout quarter.
However, gold loan tonnage declined 4% sequentially, following a 2% decline in Q3FY26 — meaning volume growth is slowing even as value growth surges. Customer count declined 2% sequentially due to churn in the lower-ticket loan segment. Stage 2 and Stage 3 loans increased during the quarter, though management clarified this was largely linked to RBI-mandated borrower-level classification changes rather than actual asset quality deterioration. Management guided for 15% AUM growth in FY27 — a significant deceleration from the 50% seen in Q4FY26 — and maintained return on assets guidance of 3.5%.
What four brokerages are saying
Bernstein maintained its Outperform rating with a target price of ₹4,500, calling the quarter healthy and highlighting NIM improvement to 20.8%, stable operating expenses, and resilient asset quality. The brokerage noted the Stage 2 and 3 loan increase but accepted management’s RBI classification explanation.
Morgan Stanley retained its Overweight rating with a target price of ₹4,330, citing a strong profit beat despite slightly weaker-than-expected loan growth. The brokerage raised FY27 and FY28 earnings estimates by 6% and 4% respectively and increased NIM assumptions. Morgan Stanley described Muthoot’s valuation as attractive at 11.5 times FY28 estimated earnings and 2.5 times FY28 estimated book value against a projected return on equity of 24.5% over FY27-28.
CLSA maintained its Outperform rating with the highest target price on the street at ₹4,600, noting Q4 profit exceeded estimates by 30% on stronger net interest income and sharp loan yield improvement. CLSA trimmed loan growth estimates due to the recent correction in gold prices but raised FY27 profit estimates by 15% on higher yields.
Jefferies maintained its Buy rating, marginally cutting its target to ₹4,350. The brokerage projected 15% EPS CAGR and 25% return on equity over FY26-28, citing available LTV headroom and branch expansion as growth support.
Why the stock is still falling
The selloff reflects a forward-looking repricing rather than a rejection of Q4 numbers. Gold prices, which have been a turbocharger for Muthoot’s AUM at record levels near ₹1,61,700 per 10 grams, are now under pressure following India’s import duty hike to 15% and the global easing of the extreme risk-on trade in precious metals. If gold prices correct materially, Muthoot’s AUM growth and LTV buffer both compress simultaneously — a double negative for a business whose current 57% portfolio LTV sits well within the 85% ceiling, but whose growth story is partly predicated on gold price tailwinds continuing.
Of the 25 analysts tracking the stock, 14 currently have a Buy rating, six recommend Hold, and five carry a Sell call — a distribution that reflects the bull-bear tension on display in today’s price action.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a SEBI-registered financial advisor before making investment decisions.